Long-Term Care Insurance
What is Long-Term Care?
Long-Term Care is the type of assistance people need to perform activities of daily living which include eating, bathing, continence, dressing, toileting and transferring. Long-term care needs typically arise as part of the normal aging process, but can also be due to an injury or illness, such as multiple sclerosis, stroke, rheumatoid arthritis, or due to a cognitive impairment, such as Alzheimer’s disease. (LTC-2100-2 5/11)
Where is long-term care provided?
The need for long-term care does not mean being confined to a nursing home. According to the U.S. Department of Health and Human Services, 80% of long-term care is provided at home. You can receive long-term care in a variety of settings, including:
- Adult Day Care Centers
- Assisted Living Facilities
- Nursing Homes
- Hospice Facilities
- Your Home
(LTC-2100-4 5/11)
Personal Premium Payments:
The table below shows the portion of the annual premium, which can be deducted by an individual who itemize deductions and whose total medical expenses exceed 7.5% of adjusted gross income. The table is effective beginning January 1, 2012.
| Up to Age 40 | Ages 41-50 | Ages 51-60 | Ages 61-70 | Ages 71 & up |
| $350 | $660 | $1,310 | $3,500 | $4,370 |
| BUSINESS TYPE | SITUATION | BUSINESS TAX BENEFIT | PERSONAL TAX BENEFIT |
| C Corporation (Form 1120) |
Business pays the premium | 100% of premium deductible | Premium not considered taxable income; Benefits are tax-free. |
| Qualified Personal Service Corporation (Form 1120) |
Business pays the premium | 100% of premium deductible | Premium not considered taxable income; Benefits are tax-free. |
| S Corporation (Form 1120 S) |
Business pays the premium for employee or shareholder- employee who owns an interest of 2% or less. Business pays the premium for shareholder- employee who owns more than 2% interest. | 100% of premium deductible | Premium not considered taxable income; Benefits are tax-free |
| Partnerships & LLP’s** (Form 1120 S) |
Business pays the premium for non-partner employees | 100% of premium deductible | Premium not considered taxable income; Benefits are tax-free |
| Sole Proprietor (Schedule C) |
Business pays premium for sole proprietor | Sole proprietor may deduct 100% of age eligible premium* | Premium included in sole proprietor’s gross income; Benefits are tax-free |
| Section 501(c) Tax-Exempt Organization (Form 990) (Schedule C) |
Organization pays the premium | Organization is non-profit and pays no taxes | Premium not considered taxable income; Benefits are tax-free |
The ability to deduct a portion of, or the entire Long Term Care premium and still receive tax-free Long Term Care benefit payments is valuable. We can provide additional information if you desire.
*The amount of premium treated as a medical expense as defined in Section 213(d)(1) and Section 213(d)(10)of the Internal Revenue Code. Eligible premiums are based on age and are adjusted for inflation annually. Section 162(l) provides special rules for deductibility of health insurance costs for self-employed individuals.
**LLC members are considered to be partners for income tax purposes.
NOTE: The above is not to be considered legal nor accounting advice. Consult your attorney and accountant before acting on any form of program which may have tax consequences.